Fairfax disclosed the information late on Thursday in its
second-quarter financial statement.

"The investigation concerns the possibility of illegal
insider trading and/or tipping (not involving any personal
trading by the individuals) in connection with a Quebec
transaction," Fairfax said.

Tipping refers to the practice of passing along sensitive
information that could then be used for trading.

Watsa, a well-known contrarian investor, addressed the issue
on a conference call early on Friday, denying he, Rivett and the
company had done anything improper.

"We are fully cooperating with the authorities and we are
required strict confidentiality during the investigation," he
said. " ... I can say there is no personal trading involved and
we are confident that we did nothing wrong."

The Autorité des marchés financiers, the securities
regulator for the French-speaking Canadian province, did not
immediately respond to requests to confirm the investigation.

Shares of Fairfax were up 1.9 percent at C$523.06 in morning
trading.
(Reporting by Cameron French; Editing by Lisa Von Ahn)